The demand for a mobile-first experience is at an all-time high, and the financial industry is not exempt from this trend. Despite the emergence of new mobile banking solutions, smaller financial institutions can still easily get stuck in juggling quality, speed, and price. This raises the question – why does mobile app development remain pricey despite years of active digitalisation, and what can be learned from IKEA's example?
Mobile banking has been a popular trend among financial institutions for some time now, with many rushing to develop their own apps after the launch of the App Store and Google Play. However, the complexity of legacy systems and customers' evolving needs have made it challenging to create user-friendly apps. Moreover, the emergence of mobile-first neo-banks, like Revolut, and Monzo, has set a higher standard for traditional banks, fintech startups, and other financial institutions. As a result, there’s now a "fuelling race" for mobile banking development, driven by the increasing demand for mobile-friendly access to financial services.
The Truth Behind a Heavy Price Tag of Mobile App Development
The demand for mobile banking is further supported by the fact that 88% of consumers access their accounts through smartphones or tablets, according to Alkami's 2022 Digital Banking Performance Metrics report. Moreover, McKinsey's Consumer Trends in Digital Payments report shows that the number of users with three or more digital wallets has increased from 18% in 2021 to 30% in 2022.
Developing a customised mobile banking app can be challenging and costly, with companies needing dedicated resources, a long development process, and a significant investment in Total Cost of Ownership (TCO) for initial development, infrastructure, continuous improvements, support, and maintenance. While this may not be an issue for larger enterprises, it can be a struggle for small and medium-sized businesses. Despite these challenges, the goal of delivering a great user experience for customers is still a top priority for everyone involved in mobile banking.
Navigating the Trade-Offs: How SMEs Tame the Interplay of Quality, Speed, and Price
In fact, Airship's Mobile App Experience Gap Survey revealed that brands with user-friendly mobile apps generate 3.5 times more revenue than those without. Such data proves that customer satisfaction is vital to the success of any mobile application.
Regardless, creating a mobile banking app from the ground up is challenging, especially for small and medium-sized companies doing it for the first time. Due to limited time and financial resources, SMEs can usually prioritise only one or two of the three elements in the quality, speed, and price triangle. Quality and speed are often essential because a high-quality app that provides a great user experience is crucial to a company's brand image. Moreover, customers expect fast problem-solving, and businesses want a faster time-to-market. Therefore, SMEs may prioritise costs and speed over quality, leading to delays in launching the app or the release of a poor-quality mobile app, missing out on the chance to gain a competitive edge.
The whole interplay of quality, speed and price spices things up for SMEs that seek to kick off their mobile banking experience or keep up with big enterprises in the mobile banking market.
Taking IKEA as a Role Example for Smart Mobile Banking Decisions
Drawing a parallel between mobile banking and IKEA, it's clear that having a mobile app is no longer a luxury but a necessity in today's digital age. This demand is reinforced by the fact that 88% of consumers use their smartphones or tablets to access their accounts, as stated in Alkami's Digital Banking Performance Metrics 2022 report. However, SMEs in the financial industry face difficulties acquiring mobile banking due to the same "quality, speed, and price" dilemma that can slow down smaller finance companies.
Knowing that mobile app demand is heavily pulsing, mobile banking providers with SMEs should focus more on providing the most convenience at reasonable pricing rates. This will improve access to more SMEs struggling with limited time and financial resources. As a result, these SMEs are more inclined to rely on a single provider. Over time, this business model can become a revenue booster as more SMEs gain access to mobile banking services and continue to seek ongoing mobile app support and maintenance from the same provider.
Smaller financial institutions may take some time to find the right balance in their offerings. However, by focusing on meeting the primary needs of their users, they can move more quickly. For instance, if users are looking for simple money transfer or payment features, it's unnecessary to immediately overload app with features. Instead, the priority should be on fulfilling the essential requirements first, such as launching a mobile app with pre-set functionality, e.g., as a white-label mobile application. Then, as the business grows, additional features and designs can be added based on user feedback in due course.
The digital transformation happening in the fintech market can lead to a belief that soon, all small and medium-sized enterprises will be capable of launching user-friendly mobile banking apps as effortlessly as customers can select and purchase IKEA furniture.